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The second you have interest in or ownership of an asset (like a house or car) you technically have an estate. “So, even if you don’t think you have an estate … chances are you do,” says Joe Sicchitano1, senior vice president and head of wealth planning and advice delivery for SunTrust. And there are steps you should be taking toward smart estate planning—Joe offers the following advice.
What are some items that comprise an individual’s estate?
You have the traditional items like your financial accounts, bank accounts, brokerage accounts, retirement accounts—if it has an account number attached to it, it’s almost certainly in your estate. There’s also property, such as real estate or car(s).
Some items that are often overlooked (and sometimes hard to value) are the properties and furnishings in the home. For instance, what’s the end table you inherited from your aunt 20 years ago worth now? Also, collectible items such as coins, stamps, art, etc. Lastly, intellectual property is also overlooked, such as patents or warrant rights. Remember, if you have an interest in or ownership of property, that’s part of your estate.
Is there a certain age individuals should start thinking about estate planning?
I don’t think of estate planning solely in terms of age, but consider age-related milestones when you will likely need to revisit and update your estate plan. A few common check-in milestones are 1) when you get married, 2) when you have kids, 3) when your children turn 18, 4) as soon as your assets increase enough to require trusts and 5) if you are active in charitable work and want to make sure certain organizations are part of your plan.
Are there similarities in why people don’t consider (or even think about) estate planning?
There’s a common misconception that you have to have a certain amount of assets to warrant an estate plan, so debunking that is important. One “aha moment” for clients is when they realize they actually have an estate plan even if they didn’t set one up on their own. There are estate laws in each state, contractual laws for how assets pass from one to another, etc. So even if you don’t think you have an estate plan, you do ... a court just might be deciding it. Also, I don’t think people like to think about it because it’s psychologically unpleasant considering our mortality or illnesses and injuries that may incapacitate us.
Challenge: If you’re on the younger side, estate planning might not seem like a priority—but it should be. Challenge yourself to think about the different stages of estate planning and what’s right for you and your loved ones.
How can an estate plan help families during an often difficult and emotional time?
This is a big concept in estate planning that’s underappreciated until it’s realized. In a blended family, for instance, there may be apprehension over how the original family is being cared for. So if you can lay that out in estate documents (and be transparent), it can help avoid a lot of family angst—the instructions are ready in advance.
Dealing with a family member’s death firsthand gives you a different appreciation for estate planning. For example, everything was in order for my dad’s estate, and it was such a relief for my brother and me because we had a lot of decisions that could have been really stressful. But because he had a plan in place and we were executing his wishes, that was very comforting to us.
And don’t forget important documents that are often overlooked, such as medical power of attorney, living wills, etc. These documents help relieve some of the burden for making tough medical choices because you’re able lay them out in advance and appoint people to administrate those wishes (even if you are not deceased but incapacitated in some other way).
How can estate planning help individuals protect their values?
Wills are used to designate how you want your property (or other items of value) distributed. For example, you can set up percentage shares that are owned by prospective beneficiaries. And in addition to passing along items to individuals, you can also designate some portion of your estate to go to something you care about—whether that’s a charity, a foundation, an educational institution, etc.
What questions should your estate professional be asking you?
A good estate planning professional should walk through the following: What do you want to happen with your estate when you die? Do you feel strongly about how assets should pass to your children? How do you want the physical care of your minor children to be administered, and whom do you trust to do that? Who should have financial authority?
Challenge: These are only a few examples, but make sure an adequate number of “what ifs” are considered for multiple scenarios.
Overall, how should individuals be thinking about estate planning?
An estate plan is about order, convenience, privacy, minimizing costs and conflict, and making sure your wishes are not a burden to someone else. I tell clients you don’t need an estate plan if you’re not at all concerned about the orderly transfer of property, avoiding unnecessary fees, privacy and relieving stress on those who have to administer your estate, for example. Once you broaden your view on what estate planning is and understand how it can help overall, you’ll find reasons to give it your attention.
- Make sure you have an estate plan if you have interest in or own any asset (like a house or car).
- An estate plan can bring families comfort during a difficult and emotional time.
- An estate plan is about order, convenience, privacy, minimizing costs, minimizing conflict and making sure your wishes are met.
Nobody wants to think about the “what ifs?” But part of your financial future includes planning for just that. Keep reading: Learn to plan ahead even if you’re young and healthy.
1Joe Sicchitano, Registered Representative, SunTrust Investment Services Inc. Investment Adviser Representative, SunTrust Advisory Services Inc.This content is educational in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
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